At the Intersection of Health, Health Care and Policy

Cite this article as:

Jill R. Horwitz
Making Profits And Providing Care: Comparing Nonprofit, For-Profit, And Government
Hospitals
Health Affairs, 24, no.3 (2005):790-801
doi: 10.1377/hlthaff.24.3.790

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M a r k e t Watc h
Making Profits And Providing Care: Comparing
Nonprofit, For-Profit, And Government Hospitals
Discussion of the value of nonprofit hospital ownership must account
for the differences in service offerings among hospital types.
by Jill R. Horwitz
ABSTRACT: Three types of entitiesnonprofit, for-profit, and governmentown hospitals.
Yet we know neither whether hospital types specialize in different medical services nor how
service profitability affects specialization. In this econometric analysis of American Hospital
Association data for every U.S. urban, acute care hospital (19882000), more than thirty
services were categorized as relatively profitable, unprofitable, or variable. For-profits are
most likely to offer relatively profitable medical services; government hospitals are most
likely to offer relatively unprofitable services; nonprofits often fall in the middle. For-profits
are also more responsive to changes in service profitability than the other two types.

o w d o f o r - p r o f i t hospitals make
profits? One theory is that they manage their case-mix more carefully
than nonprofit and government hospitals do.
For example, they differentially locate in areas with relatively well-insured patients.1
Underlying this concept of profit making is
the assumption that all general hospitals, regardless of ownership, are alike in the types of
medical services they provide. They merely
differ in their patient mix.
This paper advances a different mechanism
of profit making. It proposes that for-profit
hospitals are more likely than other types to
decide which medical services to offer based
on service profitability. Under this theory, general hospitals do not provide a standard array
of medical services. Instead, they specialize.
Analyzing 19882000 data on medical service
provision for every U.S. urban, general hospital, this paper tests whether hospital types
specialize in services based on profitability.

Which profit-making method hospitals adopt,

and to what degree hospital types employ
them, matters a great deal for tax policy, structuring reimbursement, and quality of care.
Two-thirds of all U.S. urban hospitals are
nonprofit, with the remainder split between
for-profit and government ownership. These
hospital types operate under different legal
rules. For-profits may distribute accounting
profits to shareholders, whereas government
and nonprofit hospitals enjoy income and
property tax exemptions. However, there is
reason to expect all hospitals to provide a similar array of medical services: General hospitals all treat patients with a mix of needs, contract with the same insurers and government
payers, operate under the same health regulations, and employ staff with the same training
and ethical obligations. Consequently, it is not
surprising that much of the empirical literature
on corporate ownership finds little difference
among hospital types.2

Jill Horwitz (jrhorwit@umich.edu) is an assistant professor of law at the University of Michigan Law School in
Ann Arbor.

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Although the ownership literature is voluminous and widely debated in the United
States and abroad, it is incomplete.3 Studies
have mainly examined financial topics such as
costs, profits, billing, the value of uncompensated care, and responsiveness to financial
pressure. Important subjects such as quality,
physician control, and patient access have
been studied less frequently, have focused on a
limited number of services, and have generated
inconclusive results.4
Researchers have not previously looked
broadly at whether any hospital types systematically offer relatively profitable services and
avoid relatively unprofitable ones. To that end,
this study investigates how ownership affects
the central activity of hospitals: medical care
provision. It evaluates more than thirty services, ranging from sports medicine to AIDS
treatment, to ask whether ownership is correlated with offering services and how those
choices relate to profit seeking.

Study Data And Methods

n Hospital population. Data are from the
American Hospital Associations (AHAs) Annual Surveys of Hospitals during 19882000
and the 1990 U.S. census. The AHA survey had
almost a 20 percent nonresponse rate, and
nonrespondents were disproportionately forprofit hospitals (1988: 3 percent nonprofit, 4
percent government, 18 percent for-profit;
2000: 14 percent nonprofit, 20 percent government, 26 percent for-profit). Since the same
hospitals were not missing in all years, however, the results should be valid. The analysis
included all nonrural, acute care hospitals that
operate in metropolitan statistical areas
(MSAs) with at least two general medical and
surgical hospitals, excluding military, uncategorized federal, and prison hospitals. I excluded rural hospitals because there are relatively few for-profit hospitals in rural areas and
they provide a limited range of services. In 1995,
for example, of the roughly 2,500 rural hospitals, approximately 8 percent were for-profit,
and only a few provided open-heart surgery.
n Study variables. Hospitals were classified by ownership: nonprofit, for-profit, and

government. They were asked whether each

service was offered at the hospital or another
hospital, or was not available (19881993), or
whether the service was offered at the hospital
or a subsidiary, another location in the system,
the network, or a joint venture (19942000).
Because the study assessed hospital-based services, the first categories in the two survey versions were treated as equivalent. Roughly forty
variables were included in the data on acute
care services, of which thirty-two were sufficiently well-defined and consistent across the
relevant time period to be useable (Exhibit 1).
I imputed missing values using data from
the years before and after the missing year. For
the end years (1988, 2000) I based the imputation on the next or previous two years. Where
several values were missing, I excluded the observations. Generally, I imputed fewer than 4
percent of observations for each service.
n Determining profitability. To test hospitals responsiveness to service profitability, I
sorted services into three categories: relatively
high, low, and variable profitability (see Exhibit 1). The classifications were based primarily on the peer-reviewed medical and social
science literature. Also, because Medicare payments are the largest single source of hospital
revenues, I consulted Medicare Payment Advisory Commission (MedPAC) and Prospective
Payment Assessment Commission (ProPAC)
reports to Congress for the relevant years.5 Interviews with hospital administrators and
doctors, as well as analyses of the socioeconomic or insurance status of patients likely to
demand various services, supported the case
that a service was relatively profitable or unprofitable.
Because this project is concerned primarily
with hospitals behavior and motivation, I
checked the scientific literature with a review
of trade publications, business magazines, and
newspaper reports. The qualitative evaluation
of relative service profitability was critical to
the project because perceptions of whether a
service would be profitable were likely as important determinants of service investment
choices as whether services turned out to be
profitable. The various sources yielded re-

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EXHIBIT 1
Percentage Of Hospitals Offering Services And Relative Profitability Status, 1988
2000

Service

Percent

AIDS (outpatient)
AIDS services
AIDS unit
Alcohol beds
Alcohol/drug (outpatient)

11
54
4
30
33

Angioplasty
Birthing room
Burn treatment
Cardiac catheterization lab
Computed tomography (CT) scanner

40
69
5
54
92

Child psychiatric services

Diagnostic radioisotope facility
Emergency room
Extracorporeal shock-wave lithotripter
Fitness center

25
81
96
17
24

HIV test
Home health
Magnetic resonance imaging (MRI)
Neonatal intensive care
Obstetrics (beds)

60
44
46
35
73

Obstetrics (births)
Open-heart surgery
Orthopedic surgery
Pediatric intensive care unit
Positron emission tomography

71
34
92
22
6

Psychiatric (inpatient)
Psychiatric emergency services
Skilled nursing
Single photon emission CT

49
48
35
45

Sports medicine
Trauma center
Ultrasound
Womens center

32
25
96
47

Relatively
profitable

Relatively
unprofitable

Variable

SOURCE: Authors analysis of American Hospital Association Annual Surveys, 19882000.

NOTE: Includes all nonrural, general medical and surgical hospitals, in metropolitan statistical areas with more than one
hospital.

markably similar results.6 Abbreviated examples of three services follow.

Open-heart surgery, for example, is relatively profitable. Like almost all surgical and
related services, cardiac servicesincluding
cardiac catheterization labs, angioplasty, and
coronary artery bypass graft (CABG)are
widely known to be hospital profit centers.7

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Insurers typically reimburse heart attack

treatments at high rates, patients receiving
CABG are unusually well insured since most
are covered by Medicare, and there is high and
increasing spending on cardiac care.8 From
1984 to 1994, the real price for bypass surgery
among Medicare patients rose 2.3 percent annually, from $29,176 to $36,564 (1991 dollars),

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while the share of patients receiving the treatment increased by one percentage point annually, from 5 percent to 15 percent.9 The costs of
supplying CABG in real terms either were flat
or fell during the period.10 In 1991, because
spending on bypass surgery was so high, the
Centers for Medicare and Medicaid Services
(CMS, then HCFA) ran a pilot program in
which hospitals and physicians negotiated
prices.11 During the study period, for-profit
corporations opened single-service cardiac
surgery centers, while neighboring hospitals
complained of losing profitable business.12
Conversely, hospital-based, psychiatric
emergency services are relatively unprofitable
for several reasons: (1) the emergency department (ED) is a comparatively unprofitable setting, which attracts patients whose admissions are more costly than those of patients
who are admitted to the hospital by other
means; (2) psychiatric care reimbursement is
uncertain and often low relative to cost; and
(3) the care attracts a poor, poorly insured,
sick, and difficult-to-manage population.13
Compared with that of acute care, the profitability of postacute services varied dramatically during the 1980s and 1990s. With legal
challenges to reimbursement resolved and the
hospital prospective payment system (PPS)
implemented, postacute services became
highly profitable by the early 1990s.14 Unlike
acute services diagnosis-related group (DRG)
payments in which hospitals receive a per episode payment for each patient, Medicare paid
hospitals a cost-related reimbursement for
postacute services. Hospitals could increase
reimbursements by unbundling the services
and transferring patients to postacute care at
the end of their hospital stay.15 There is considerable evidence of these transfers. From 1981 to
1998 the number of inpatient days for Medicare beneficiaries fell at an average annual rate
of 4.1 percent; from 1986 to 1998 home health
visits for Medicare beneficiaries grew at an average annual rate of 15.6 percent.16 Payments
were particularly generous to new entrants,
with skilled nursing facilities (SNFs) and
home health services exempt from cost limits
for the first years of operation. In fact, home

health payments grew from $3.9 billion to

more than $18.3 billion between 1990 and
1996.17 Hospital administrators and regulators
alike recognized the profitability potential of
postacute care.18
With passage of the 1997 Balanced Budget
Act (BBA) of 1997, however, the profit-making
opportunities plummeted. Medicare payments were reduced, the CMS developed a
PPS for postacute services, and home health
care spending fell by a factor of two.
n Statistical analysis. Using a probit
model, I analyzed whether ownership was correlated with the probability of offering each of
approximately thirty medical services (Exhibit 1). Independent variables included ownership, year, and the interaction of the two.
To correct for potential biases, I controlled
for hospital and market characteristics. Hospital variables included size (measured by admissions), teaching status (measured by teaching association membership), and a dummy
variable for location by geographic region.
Market characteristics included patients sex,
race, household income, and age. These were
compiled using the ten-mile radii around the
centers of the hospitals ZIP codes, the mean
distance that captures 75 percent of discharges
among acute care urban hospitals.19
I adjusted for heteroskedasticity, and, because the probability of offering a service is not
independent among years, I allowed for an arbitrary covariance matrix within each hospital
over time. By varying the hospitals ownership
type while holding the independent variables
constant (at 1994 levels or the next-closest
year), I predicted the probabilities that each
hospital in each year would offer a service. I
then averaged the individual predicted probabilities to obtain a single probability that a
hospital type would offer a service each year.
I performed sensitivity tests on the three
services described above. Because size is the
best predictor of service offering, I restricted
the regressions to the observations in the top,
bottom, and middle two quartiles of hospitals
measured by admissions.
To ensure that ownership, rather than geography, explained these results, I ran several

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sensitivity tests related to hospital regions.

John Wennberg and others have observed that
medical service provision varies considerably
by small region.20 Consequently, one might
think that firm types chose where to operate
based on the local character of demand. I
tested this alternative explanation for the results by using a fixed-effects approach, including an indicator variable for the year 2000 Hospital Referral Regions (HRRs) in which each
hospital operates. I also altered the region variable to account for areas of high for-profit penetration (for example, the South and
Southwest) and included dummy variables for
all nine AHA regions.
To test the sensitivity to other market characteristics, I added age-squared categories for
the percentage of the population over age
sixty-five and over age eighty. Because state
payment policies for mental health services
vary considerably, I included state dummies
and state-year interactions for the psychiatric
emergency service estimations. In addition, to
test variation within the government hospital
category, I excluded hospitals in the Department of Veterans Affairs (VA) system.
Sensitivity tests also included propensity
score analysis, a method used to make causal
inferences when assignment to a group, such
as nonprofit ownership status, is not random.21
The results confirmed that I compared hospitals that differed primarily by ownership and

not other hospital characteristics such as hospital size. More specifically, I determined the
conditional probability of corporate ownership (nonprofit versus for-profit; nonprofit
versus government, government versus forprofit), given the observed characteristics used
in the Probit estimates (the propensity scores),
created five subcategories defined by the estimated propensity score, and predicted the
probability of a hospital types offering a service in a given year, controlling for the propensity grouping.

Study Results
The results demonstrate that among comparable hospitals, for-profits are more likely
than nonprofits, which in turn are more likely
than government hospitals, to offer open-heart
surgery. The magnitude of these differences
seems large, given the importance of the decision to offer the service and the constraints to
doing so. For-profits are, on average, 13.0 percentage points more likely than government
hospitals (40.9 percent versus 27.9 percent, p <
.001) and 7.3 percentage points more likely
than nonprofit hospitals (40.9 percent versus
33.6 percent, p < .001) to offer open-heart surgery (Exhibit 2). Restricting the data to the
smallest hospitalsthose in the bottom two
admissions quartilesthe nonprofit-government difference for open-heart surgery was insignificant. This result is expected because so

EXHIBIT 2
Hospitals Probability Of Offering Open-Heart Surgery, By Ownership Type, 19882000
Probability (percent)
50
For-profit

40
30

Not-for-profit
Government

20
1988

1990

1992

1994

1996

1998

2000

SOURCE: Authors analysis of data from American Hospital Association Annual Surveys, 19882000.
NOTES: Probit predicted probabilities include all nonrural, general medical and surgical hospitals in metropolitan statistical
areas with more than one hospital. P values are based on the chi-square test of the differences between average predicted
probabilities of offering services in 19882000 by hospital type. Not-for-profit versus for-profit, p < .001; not-for-profit versus
government, p = .001; for-profit versus government, p < .001.

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profit hospitals offering home health services

more than tripled (17.5 percent to 60.9 percent), controlling for hospital and market
characteristics. During the same period, the
probability of offering home health care only
grew slightly more than ten percentage points
(40.9 percent to 51.7 percent) for nonprofit
and fourteen percentage points (38.1 percent
to 51.9 percent) for government hospitals.
From 1997 to 2000, as home health care became relatively unprofitable with the implementation of the BBA of 1997, the probability
of offering it fell a striking 37.5 percentage
points among for-profit, 7.7 percentage points
among nonprofit, and 1.5 percentage points
among government hospitals.
n Other services. Tests of more than
thirty other services yielded similar results
(Exhibit 5). While for-profit hospitals were
only somewhat more likely than nonprofits to
offer relatively profitable services, both forprofit and nonprofit hospitals were considerably more likely than government hospitals to
offer relatively profitable services. For-profits
were less likely than nonprofits, which in turn
were less likely than government hospitals, to
offer relatively unprofitable services. Forprofit hospitals were more responsive than the
other types were to rapid changes in service

few small hospitals offer open-heart surgery.

Unlike open-heart surgery, for-profits are
less likely than nonprofits, which in turn are
less likely than government hospitals, to offer
psychiatric emergency care (Exhibit 3). On average from 1988 to 2000, controlling for other
characteristics, 41 percent of for-profit hospitals offered psychiatric emergency services,
compared with 48 percent of nonprofit and 56
percent of government hospitals. Again, the
magnitude of these differences is large: Forprofits are 15.0 percentage points less likely
than government hospitals and 8.4 percentage
points less likely than nonprofit hospitals (p <
.01) to offer psychiatric emergency care.
Among the smallest hospitals, the nonprofit
versus for-profit difference was insignificant,
as was the difference between nonprofit and
non-VA government hospitals.
Not only did the probability of offering
home health care vary by ownership, but the
relative differences among types varied over
time. The probability of offering home health
services when the service was profitable increased for all three hospital types. However,
among for-profits, growth of home health care
when profitable and decline when unprofitable were particularly dramatic (Exhibit 4).
From 1988 to 1996, the probability of a for-

EXHIBIT 3
Hospitals Probability Of Offering Psychiatric Emergency Services, By Ownership Type,
19882000
Probability (percent)
55

Government

50
Not-for-profit
45
For-profit
40
35

1988

1990

1992

1994

1996

1998

2000

SOURCE: Authors analysis of data from American Hospital Association Annual Surveys, 19882000.
NOTES: Probit predicted probabilities include all nonrural, general medical and surgical hospitals in metropolitan statistical
areas with more than one hospital. P values are based on the chi-square test of the differences between average predicted
probabilities of offering services in 19882000 by hospital type. Not-for-profit versus for-profit, p = .001; not-for-profit versus
government, p < .001; for-profit versus government, p < .001.

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EXHIBIT 4
Hospitals Probability Of Offering Home Health Services, By Ownership Type,
19882000
Probability (percent)
60

50
Not-for-profit
40
For-profit

Government

30

20
10
1988

1990

1992

1994

1996

1998

2000

SOURCE: Authors analysis of data from American Hospital Association Annual Surveys, 19882000.
NOTES: Probit predicted probabilities include all nonrural, general medical and surgical hospitals in metropolitan statistical
areas with more than one hospital. P values are based on the chi-square test of the differences between average predicted
probabilities of offering services in 19882000 by hospital type. Not-for-profit versus for-profit, p < .001; not-for-profit versus
government, p = .071; for-profit versus government, p < .001.

profitability (Exhibit 6). The average probability of a hospital types offering a medical service from 1988 through 2000, controlling for
other characteristics, is reported in Exhibit 7.

Discussion And Policy Implications

Medical service offerings vary markedly by
ownership, likely because hospital types adopt
or prioritize goals differently. Although all
hospitals must earn sufficient profits to operate, the evidence here suggests that for-profits
are more likely to respond to profitability than
the other types are when making supply decisions. Since government hospitals are most
likely to supply the unprofitable services that
are disproportionately needed by poor and underinsured patients, the evidence also suggests
that such hospitals are caregivers of last resort.
Nonprofit hospitals are often the intermediate
type in terms of balancing profit seeking and
serving the poor through service choices.
Neither the profit-making versus charitable
divide (for-profit versus nonprofit and government) nor the public versus private divide
(government versus nonprofit and for-profit)
fully predicts behavior. These results suggest
that corporate form can be used as a regulatory tool when regulations are designed to ac-

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count for the motivations and relative responsiveness to profitability of all three types. For
example, ownership could be considered in
designing reimbursement policies. In addition,
if they hope to secure a full range of services,
states attorneys general should consider the
mix of types in a market when overseeing hospital conversions.
A further implication is that the measure
traditionally used to justify nonprofit tax exemptionsthe provision of uncompensated
careis too limited. Recent calls to eliminate
nonprofit subsidies, commonly founded on the
claim that there are no important differences
among corporate types, should be rejected.22
Differences in service mix matter to all patients, not only the uninsured and nonpaying
patients.
Although this paper has not addressed
health outcomes, it does raise the question of
the relationship between service profitability
and medical appropriateness. As discussed in
the home health example above, for-profits responsiveness to incentives is noteworthy for
its magnitude and speed. However, we do not
know whether the most medically appropriate
mix of hospital services is the most profitable.
Public payment rates are set through a com-

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EXHIBIT 5
Comparison Of Services Offered At Study Hospitals, By Ownership, 19882000
Relatively profitable services

F>N

F>G

N>G

Angioplasty (19892000)
Birthing rooma
Cardiac catheterization lab
Computed tomography (CT) scanner

Y***
N*
Y***
N

Y***
N
Y***
Y

Y***
Y
Y***
Y*

Diagnostic radioisotope facility

Extracorporeal shock-wave lithotripter
Fitness center
Magnetic resonance imaging (MRI)

N*
Y***
N**
Y

Y***
Y***
N
Y***

Y***
Y***
Y**
Y***

Neonatal intensive care (>0 beds)a

Open-heart surgery
Orthopedic surgery (19891993)
Pediatric intensive care (>1 beds)a

Y***
Y***
N
Y***

Y***
Y***
Y***
Y***

N***
Y***
Y***
N***

Positron emission tomography (19902000)

Single photon emission CT (19902000)
Sports medicine
Ultrasound
Womens centera

Y
N**
=
N***
Y***

Y*
Y
Y***
N
Y***

Y
Y***
Y***
Y
Y*

AIDS (outpatient) (19881993)

AIDS services (19942000)
AIDS unit (19881993)
Alcohol/drug inpatient (>1 beds)

N
N***
Y**
Y***

N***
N***
N
Y*

N***
N***
N***
N***

Alcohol/drug outpatient
Burn treatment (>0 beds)
Child/adolescent psychiatric (>0 beds)a
Emergency room
Emergency rooma

N***
Y
N
N**
N*

N***
N*
N*
Y
=

N***
N***
N
Y***
Y

HIV test (19881991)

Obstetrics (>2 beds)a
Obstetrics (100 births)a
Psychiatric inpatient (19892000, >1 beds)

N
N
N***
Y**

N*
N
N**
N***

N*
N
N
N***

Psychiatric emergency services

Psychiatric emergency servicesa
Trauma center
Trauma centera

N***
N***
N**
N**

N***
N***
N
N***

N***
N
Y
N***

Relatively unprofitable services

SOURCE: Authors analysis of data from American Hospital Association Annual Surveys, 19882000.
NOTES : F is for-profit. N is not-for-profit. G is government. Equal sign denotes that the difference of predicted probability of
offering service between firms is less than .003. F > N means that, on average over the study period, for-profits were more
likely than nonprofits to offer the specified services, with a difference of at least .003.
a
Excluding Veterans Affairs (VA) hospitals.
*p < .10 **p < .05 ***p < .01

plex and changing process based on, among

other factors, the evolving judgment of rate
setters, imperfect adjustments for hospital
markets demographic and geographic charac-

teristics, and the political strength of interested parties. Private payment rates result
from complex negotiations and relative bargaining power. We need more study on how

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EXHIBIT 6
Comparison Of Probability Of Offering Services With Variable Profits, By Ownership
Type, 19921996 And 19972000
Profitable (19921996)

Unprofitable (19972000)

Service

Home health
Skilled nursing

39.3
28.1

9.7
15.4

12.7
4.9

37.6
2.8

7.7
4.7

1.5
9.7

SOURCE: Authors analysis of data from American Hospital Association Annual Surveys, 19882000.
NOTES: Includes all nonrural, general medical and surgical hospitals, in metropolitan statistical areas with more than one
hospital. F is for-profit. N is not-for-profit. G is government. Values are the percentage-point changes in probability of offering
service during the years indicated.

and, indeed, whether these processes produce

incentives for hospitals to provide a medically
appropriate service mix.
n Study limitations. Despite the methodological strength of this workparticularly
the focus on medical services rather than financial behavior and the breadth of services
studiedit has limitations. First, as discussed
above, the nonrespondents were disproportionately for-profit. The data are self-reported
and not independently verified, although there
is no reason to suspect that data reliability is
correlated with ownership.
Second, despite the rigorous nature of the
research used to determine profitability, a note
of caution is necessary. Profitability is not an
inherent attribute of medical services; rather,
it depends on institution-specific factors such
as management skills, case-mix, and local input costs. Further, even within a single hospital, costs and charges differ, discounts vary by
individual payer, and allocation of joint costs
blur the profitability picture. Despite these
complications, however, one can reasonably
compare the relative profitability of services
defined as bluntly as they are in the AHA data.

gress is considering an extensive overhaul of

the nonprofit sectors regulatory regime to increase accountability.24 Any discussion of the
value of nonprofit hospital ownership must
account for the significant differences in service offerings among hospital types and how
those offerings vary according to profitability.
The author thanks Jia-Jia Ye for research assistance
and Paula Payton for administrative assistance. She
thanks Allan Brandt, Suzanne Cooper, David Cutler,
Phoebe Ellsworth, Don Herzog, Nancy Keating, Mary
Beth Landrum, Barbara McNeil, Martha Minow, Carl
Morris, David Naylor, Joseph Newhouse, Edward
Parson, Jonathan Skinner, Richard Zeckhauser, three
anonymous referees, and participants in the November
2003 National Bureau of Economic Research (NBER)
Health Care meetings for helpful comments. This study
was supported by a grant from the National Institute
on Aging to the NBER (Grant no. T32-AG00186); the
Hauser Center for Nonprofit Organizations; the
Harvard University doctoral program in health policy;
and the University of Michigan Law School, John M.
Olin Center for Law and Economics.

h e t h e r n o n p r o f i t organizations behave differently from

other ownership types, particularly in the hospital industry, has raised considerable debate. In 2004 more than fifty lawsuits alleging that nonprofit hospitals have
violated their charitable obligations were
filed in federal district courts alone.23 Con-

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EXHIBIT 7
Hospitals Predicted Probability Of Offering Various Services, By Hospital Ownership
Type, 19882000
Probability (%)
Service

Not-for-profit

Government

For-profit

AIDS (outpatient) (19881993)

AIDS services (19942000)
AIDS test (19881992)
AIDS unit (19881993)

8.1
53.1
63.0
3.3

26.2
65.3
66.3
7.5

6.9
45.3
62.3
5.5

Alcohol/drug inpatient (>1 beds)

Alcohol/drug outpatient
Angioplasty (19892000)
Birthing rooma

27.7
32.0
38.8
73.4

34.0
41.8
34.1
71.5

37.4
26.6
48.0
70.3

Burn treatment (>0 beds)

Computed tomography (CT) scan
Cardiac catheterization lab
Child psychiatry (>0 beds)a

3.7
92.6
53.2
25.6

7.5
90.3
48.8
28.4

4.6
92.2
60.2
24.0

Diagnostic radioisotope facility

Extracorporeal shock-wave lithotripter
Emergency room
Emergency rooma

83.0
16.9
96.6
96.6

76.0
13.1
94.6
95.6

81.2
21.7
95.3
95.5

Fitness
Home health
Home health (19881993)
Home health (19951997)
Home health (19982000)

25.2
46.8
42.1
52.5
49.5

21.4
45.9
39.1
51.8
53.9

20.8
33.0
20.5
59.5
26.2

Pediatric intensive care (>1 beds)a

Magnetic resonance imaging (MRI)
Neonatal intensive care (>0 beds)
Neonatal intensive care (>0 beds)a

18.6
48.4
33.1
33.1

25.3
40.9
33.3
38.8

31.1
50.7
45.4
45.4

Obstetrics bed (>2 beds)

Obstetrics bed (>2 beds)a
Obstetrics births (100 births)
Obstetrics births (100 births)a

75.6
76.2
74.3
74.8

64.9
76.5
63.0
75.6

73.4
74.5
69.4
70.5

Open-heart surgery
Orthopedic surgery (19891993)
Positron emission tomography scan (19902000)
Psychiatric inpatient (19892000, >1 beds)

33.6
93.9
5.6
46.6

27.9
88.4
5.2
58.5

40.9
92.6
7.2
51.1

Psychiatric emergency services

Psychiatric emergency servicesa
Skilled nursing (>2 beds)
Single photon emission CT (19902000)
Sports medicine

47.5
46.9
35.0
46.4
33.6

55.9
49.5
37.7
40.9
25.7

40.8
40.4
35.0
41.8
33.4

Trauma
Traumaa
Ultrasound
Womens center
Womens centera

25.7
25.5
96.2
46.7
46.5

23.9
30.7
95.2
49.0
42.9

21.8
21.7
94.4
52.0
51.8

SOURCE: Authors analysis of American Hospital Association Annual Survey data, 19882000.
NOTES: Probit predicted probabilities control for hospital, demographic, and geographic characteristics. Includes all general
medical and surgical, nonrural hospitals in metropolitan statistical areas with more than one hospital.
a
Excluding Veterans Affairs (VA) hospitals.

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NOTES
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